Three elements are required to be outlined in a circular economy

The world is collectively bracing for a return to normalcy, and with any luck the coronavirus pandemic will subside significantly over the coming weeks. But after such an unprecedented shock to the global economy, particularly the interdependent supply chains we’ve become so accustomed to over the decades, what will our new normal look like? In recent years, the public has become much more concerned about the looming impact of global climate change.

And with the pandemic highlighting the vulnerabilities in our current supply chains there is an opportunity to focus our recovery efforts on the building of a more circular economy. By using existing resources in an efficient and sustainable way, relying on renewable energy sources that extract more value from waste products, and minimising food waste, we can increase both quality of life and environmental care across the globe in the years ahead.

Currently, only 9% of the global economy is what we define as circular. However, people are more focused than ever on what to buy, who to buy from, and where it came from due to limited resources and the demand for sustainable products. It’s becoming increasingly clear around the world that environmental and economic priorities are intertwined and can no longer be thought of as two separate material interests.

Yet what, exactly, defines a circular economy? To enable a circular economy system, three elements need to be outlined: design out waste pollution, keeping products and materials in use, and regenerating natural systems. Choosing materials that can easily be recycled and designing the whole product so that it can be taken apart is key, keeping an end life of the product in mind. Additionally, with the right designs companies can implement new systems to reinvent materials and conserve the energy used to create them by producing reusable ways to package products, leading to a generation of natural systems.

To ensure that there are enough raw materials for food, shelter, heating, and other necessities, our economy must become circular. Our current linear-growth economic system emphasises a four-step process: raw materials sourcing, production, usage, and non-recyclable waste. And while this process is unavoidable for certain goods, it’s a system that is untenable in the long run. Conversely, the circular approach won’t be an easy or simple transition, but it’s one that will help ensure greater long-term sustainability, efficiency, and quality of life for society.

Importance of traceability

Traceability in our supply chains is one of the most important factors to a circular economy. Ensuring that companies and consumers have a clear, unadulterated understanding of where and how their products are being manufactured is critical to creating an environment where a circular economy can take hold.

Most notably, process manufacturing – particularly food and beverage manufacturing, is one of the sectors where traceability is becoming increasingly prominent. If you’ve ever heard the term farm to table, you’re already familiar with the underlying logic of traceability. It helps track where the raw inputs are coming from, how they’re being processed, and where they’re going before landing on your grocery store shelves and ultimately in your home. This helps us, as consumers, prioritise products that have been ethically and sustainably sourced and produced, and modern software and technology innovations are making it easier than ever for manufacturers to provide this level of supply chain visibility.

However, traceability isn’t just relevant to the initial production process. For example, it’s what helps producers track surplus food not suitable for human consumption and reuse it as a source for animals, which can also be transformed to fertiliser in order to nourish the soil for new ingredients for future growth. And with better understanding of the full production process, food retailers will be able to mitigate inventory storage issues more effectively, further reducing the impact of food waste.

Role of AI and IoT

The circular economy provides a unique perspective on doing business, forcing companies to rethink everything from how to design and manufacture products to their relationships with customers. The thought process is no longer on consumption, but the use of function. This is where IoT and AI can be implemented to reshape product development and usage long-term. In particular, these technologies can enable better monitoring, understanding and prevention of damage and stressors on the Earth’s land, air and water, optimising sustainability in agriculture and providing an array of benefits to the food supply chain as a result.

From an agricultural standpoint, based on the drastic economic and health impacts of Covid-19, the most valuable advantage to implementing AI is that it won’t eliminate the jobs of human farmers, it will improve their processes instead, all while having the ability of being able to identify diseases in plants with 98% accuracy.

The shift to a circular economy is a challenge, and it will take more than technological innovation to ensure its viability going forward. But the technological innovations being put into action today are creating a transition opportunity that we haven’t witnessed since the Green Revolution in the middle of the 20th century. Companies and leaders can lead this needed transition as our world encounters the challenges on climate change and other environmental issues such as waste management, the tools are available if they embrace the opportunity.

Key takeaways

• There is an opportunity to focus our recovery efforts on the building of a more circular economy.
• Currently, only 9% of the global economy is what we define as circular.
• The circular approach will help ensure greater long-term sustainability, efficiency, and quality of life.
• Traceability in our supply chains is one of the most important factors to a circular economy.
• The shift to a circular economy is a challenge, and it will take more than technological innovation to ensure its viability.